Liam Twomey (Fine Gael)

I move amendment No. 69:

In page 132, subsection (4), lines 23 to 27, to delete paragraph (b) and substitute the following:

"(b) shall be apportioned to each participating institution on the basis of any loss incurred by NAMA on the assets acquired by NAMA under this Act,".

This relates to the levy that will be applied if NAMA does not make a profit. The levy will be applied to the institutions according to the loans they submit to NAMA, not according to the losses the loans made. Let us assume that 30% of the loans are from Allied Irish Banks and that of the total losses made by NAMA at the end of the decade, 15% relate to the Allied Irish Banks loans. One would assume that the levy applied to Allied Irish Banks would relate to 15% of the losses made. However, it appears from the way this provision is structured that 30% of the levy will be applied to Allied Irish Banks because it submitted 30% of the initial loans. That is my interpretation of the provision. I believe that is wrong. If 15% of the losses result from AIB loans, 15% of the levy should apply to that bank.

I discussed this previously with the Minister, Deputy Brian Lenihan. I suggested that the levies be applied from the start but he said that would be counterproductive to what we are trying to do, which is give stability to the banking sector and confidence to investors that we will get the banks up and running. However, investors know that in ten years an undefined amount of losses could be made and that Allied Irish Banks and Bank of Ireland could be penalised for Anglo Irish Bank's losses, as it appears that Anglo Irish Bank will account for the majority of the losses from these loans. Furthermore, Anglo Irish Bank might not even exist in ten years. From the investors' point of view, there is much insecurity about what this means for Allied Irish Banks and Bank of Ireland. There is not just a sense of unfairness about this provision but it could also cause instability and lack of confidence regarding the two major banks ten years hence.